Airbus half year results show new writedowns

Victoria
By Victoria July 28, 2016 15:25

Airbus half year results show new writedowns

In its half-year 2016 results, Airbus Group reported a 4% decline in revenue to XX and disclosed two new write downs: the first is a €1bn charge for the A400M military aircraft programme; with the A350 programme charge reaching €385 million. Tom Enders, Airbus Group Chief Executive Officer, said that although the company continues to see high demand for its products, the company has had to “cope with new charges on the A400M and A350 programmes. Significant capital gains from the portfolio reshaping mitigated these programme losses but that does not make them more acceptable!” Airbus stated that the A350 Loss Making Contract (LMC) provision has been stable since the full year 2013 results – throughout the aircraft’s certification, entry-into-service and ramp-up phase, but added that as the ramp-up accelerates “challenges are being faced on supply chain capability and performance, with the cabin still the critical pacing item and outstanding work causing some slower progress on recurring cost convergence than planned. Due to this, a charge of € 385 million was taken in the second quarter as an addition to the LMC provision. This also includes lower escalation and delivery phasing. The target for a monthly production rate of ten A350s by the end of 2018 remains unchanged.” Group order intake in the first six months of 2016 was €39.1bn compared to €53.9bn in the same period last year. Airbus’ order book value totals €978bn as of 30 June 2016, compared to €1,006bn last year. Group revenues were stable at €28.8bn compared to €28.9bn last year. And, despite lower deliveries of 298 aircraft, revenues were stable at Airbus Commercial supported by the strengthening US dollar hedge rate, the manufacturer stated. Group EBIT before one-off charges was €1,684 million, while Airbus Commercial’s EBIT before one-off was €1,270 million, driven mainly by the back-loaded delivery profile, lower A330 production and transition pricing on the A320 and A330. Group self-financed R&D expenses decreased to €1,309 million, compared to €1,506 million last year. As the basis for its 2016 guidance, Airbus Group expects the world economy and air traffic to grow in line with prevailing independent forecasts, which assume no major disruptions. Airbus Group confirms its 2016 earnings and free cash flow guidance based on a constant perimeter: the manufacturer expects to deliver more than 650 aircraft and the commercial order book is expected to grow. Before M&A, Airbus Group expects stable EBIT before one-off and EPS before one-off compared to 2015. Airbus also stated in its results that Export Credit Agency financing is “targeted to resume in the fourth quarter of 2016”, hinting that the SFO investigation is nearing a close.

Victoria
By Victoria July 28, 2016 15:25